Report Ranks Barnes & Noble No. 1 in Customer Experience
New York City Barnes & Noble has been ranked the No. 1 company in Forrester Research’s The Customer Experience Index, 2008. The bookseller grabbed the top spot with an “excellent” rating and overall score of 92%.
Forrester asked nearly 5,000 consumers about their interactions with 114 companies across 12 different industries and developed its customer-experience index. The report is based on companies’ combination of ease-of-use, usefulness and enjoyability of experience. According to the report, only 11% of the firms wound up with “excellent” ratings.
“Executives regularly tell us that customer experience is critical to their competitiveness, but this year’s Customer Experience Index demonstrates that there’s room for improvement across all industries,” said Bruce D. Temkin, VP and principal analyst at Forrester Research. “While many firms are dealing with rough economic times, they can’t let customer experience fall to the back burner. If firms let their customer experience deteriorate, then they’ll lose customers and amplify the negative impact of the downturn.”
Best Buy prepares for worst case scenario
MINNEAPOLIS Best Buy reported third quarter results this morning that contained several bright spots, but the positive developments were overshadowed by extreme measures the company put in place to reduce expenditures as it braces for a protracted consumer spending slowdown.
On a positive note, total revenue for the quarter ended Nov. 29, increased 16% to $11.5 billion from $9.9 billion and gross margins increased to 24.9% compared to 23.5%. The company said it gained market share, its customer satisfaction scores reached all-time highs, and employee turnover declined 45% from a year earlier. Same-store sales declined 5.3%, but that figure wasn’t surprising given the shift in Thanksgiving this year which challenged comparisons to the prior year when Thanksgiving took place a week earlier.
The company also reported adjusted diluted earnings per share of 35 cents, which reflects a 34% decline from a year earlier. Even so, earnings per share exceeded analysts’ consensus estimate of 25 cents. Earnings per share were 13 cents if a $111 million non-operating impairment charge is included.
On the negative side, expenses as a percent of sales increased to 22.5% from 20% and operating income declined to $274 million from $351 million. Net income declined to $52 million from $228 million.
Although Best Buy’s results were better than expected, the company’s actions suggested a grim outlook for the future. For example, nearly all of its corporate employees are eligible for a voluntary separation package as the company looks to trim corporate expenses. The company also stated that involuntary reductions in corporate staff may be required, depending on the outcome of the voluntary program.
“The historic slowdown in the economy and its effect on our business over the past 90 days have been the most challenging consumer environment our company has ever faced,” said Brad Anderson, Best Buy vice chairman and ceo. “We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace. We also believe that customers will continue to reward those retailers who understand their needs and desires, and offer relevant solutions at fair prices. Yet we clearly recognize that these changes require us to make significant adjustments to our present cost structure.”
In addition to the corporate overhead reduction, Best Buy said it will cut capital expenditures in half next year.
Adrenalina won’t back down in fight for PacSun
ANAHEIM, Calif. and MIAMI In a statement issued on Dec. 15, retailer Adrenalina criticized Pacific Sunwear for refusing to engage in discussions about a possible merger. In October, Adrenalina had offered to buy Pacific Sunwear of California for $293 million.
“It is unfortunate that PacSun has not embraced our attempts, both public and private, to work cooperatively and engage in a constructive dialogue regarding a potential business combination. The Adrenalina Group is a shareholder of PacSun and intends to significantly increase its position in the near-term,” Adrenalina said.
In response to Adrenalina’s statement, Sally Frame Kasaks, chairman and ceo of Pacific Sunwear sent a letter to Ilia Lekach, chairman and ceo of Adrenalina, noting that in a letter sent to PacSun on Nov. 20, Adrenalina said it would withdraw its prior acquisition proposal, but also stated that it would “remain steadfastly determined in pursuing a strategic combination” with Pacific Sunwear.
Kasaks went on to comment that her company “strongly disagree with [Adrenalina’s] claim that [its] proposed business combination would be supported by a vast majority of our shareholders,” adding that recent communications with major shareholders did not indicate any support for a merger with Adrenalina.
“Your continuing pursuit of a business combination with Pacific Sunwear serves only to distract management and Pacific Sunwear’s employees,” said Kasaks.
Kasaks pointed to several factors as to why a merger with Adrenalina would not benefit PacSun shareholders:
1. Adrenalina currently operates three stores based in Florida and generated sales of less than $3.5 million in 2007 and $4.0 million in the first nine months of 2008.
2. Adrenalina reported a net loss of approximately $5.8 million in 2007 and approximately $6.2 million during the nine month period ended September 30, 2008.
3. In Adrenalina’s Report on Form 10-Q filed with the SEC on November 10, 2008, the company stated:
“Currently we do not believe that the company will be able to generate any significant cash flow during the coming year to fund our planned expansion or to fund our current operations. However, under our current model of funding operations through capital contributions and debt we believe that we can sustain ourselves for the next twelve months. Currently we are seeking additional outside funding to keep the business operational beyond 2009; however there is no assurance additional debt or capital will be available to us on acceptable terms.”
4. Adrenalina’s auditors have indicated that there is substantial doubt as to the company’s ability to continue as a going concern. Note 2 to the financial statements included in Adrenalina’s Report on Form 10-Q for the quarter ended September 30, 2008 also states: “The company continued to incur significant operating losses through the nine months ended Sept. 30, which raise substantial doubt about the company’s ability to continue as a going concern.”
5. Adrenalina’s market capitalization as of the date of this letter is approximately $14 million, based on the closing trading price of Adrenalina’s stock on Dec. 12.